The determinants of issuers’ long term credit ratings : American S&P500 index

摘要

In this paper, we examine the impact that various financial and business profile variables have on credit ratings issued for the S&P500 firms by Moody’s. Our ordered probit model indicates that firms’ financial policy, size, liquidity, interest and debt coverage have the most pronounced effect on credit ratings. Our results show that different coefficients are associated to the increments of interest and debt coverage ratios. Business profile variables are not significant. Liquidity variable is also a significant determinant of the issuer long-term credit rating and not just the short term one.